It's the move for which The IKN Weekly positioned itself earlier this week by taking one short position off the table and adding to two long positions (flash updates). There's still work to be done here (big zone between 1320 and 1360 on the chart), but that's for another day. This is good.

2/13/14

This report on the inflation news out of Argentinatoday starts well-written and even-handed, moves to get relevant, on-topic quotes from people covering the market and then expands into insightful analysis on the wider implications of the "come clean" inflation figures today. I see so much mediocrity written in EngLang biz news on Argentina, so credit where it's due when a smart report is available. Highly recommended if you want to get up to speed about the country without having to wade through somebody else's agenda (be it pro or anti). Go read it here.

A neat and simple little chart from Scotia today that shows the 2014 year to date performances of various mining sector plays. Stocks, metals, indices, all sorts in the mix and good reference material:

By the way, one that's not featured is Rio Alto Mining (RIO.to) (RIOM), which is up 45.8% YTD. Just sayin'.

Isn't it weird and coincidental how these things happen? The dude gets kidnapped on February 10th, not a dicky bird from the company, IKN writes a short post on Feb 12th and Lo! And! Behold!, we get a NR from the companythe very next morning. It's almost as if people take this pisspoor ranty stupid oversweary blog seriously....

One has to wonder who the avid reader of this humble corner of cyberspace is; Ever Márquez perhaps? Raymond Angus? Hell you never know, it might be Andrew Bristow, he and this blog go back a long way.

There are side issues, such as the way yesterday's anti-government protest marches were organized in advance and coincided with both Venezuela's traditional Student's Day and therefore the pro-government marches set for that day. Also, back when the Chávez government so nearly fell in 2002 the next day saw more people on the streets and the day after more again, which is unlikely this time around (best guess: we'll see some action today/tonight, but lower level). But the major factor is simple:

The Maduro Government Is Not Sufficiently Unpopular

Note that I didn't write Maduro, but the Maduro government. It goes without saying that on a charisma scale Nicolás Maduro isn't a patch on the president that came before him. However, Venezuela 2002 saw Chávez and his government at a low point in popularity, the grand majority being against where he was taking the country. Here in 2014 Venezuela is arguably and roughly split down the middle, 50/50 (or 40/40 and 20 don't care if you prefer) and although I'd be the first to agree that it's by no means a healthy situation, it's not one that forments the toppling of a government. True for Venezuela, true for world history.

We're seeing a decent dose of wishful thinking from the media coverage of yesterday, but the fact (not speculation but fact) that a large chunk of the Venezuelan population supports the current government is given very short shrift; we only get to hear from those who "want change" (that very 21st century euphemism for something much darker). We're also seeing bad things from the Maduro government, such as the censorship of TV stations that covered the violence and the calls to arrest the supposed ringleader Leopoldo López. As I mentioned yesterday to a twitterfriend, no one is innocent. Longer term there's a decadence in Venezuela that its government must address to remain stable, but near-term don't expect the big changes that are currently getting hyped to you.

UPDATE: For those readers versed in Spanish, this post written by a university professor in Venezuela who was in the anti-Maduro march yesterday is well worth your time. Your author agrees with her.

UPDATE 2: Greg Weeks picked up on the same 'Update 1' post over at his blog and explains its main points in English, here.

There's a pattern, too. They're all doing as expected or slightly better on top line revenues, but then comes extras on the costs line and profits simply vaporize, even before they take another round of write-down charges. And remember, these are the good operators! (or so they tell us). What do you think is going to happen to the crappy high cash cost miners out there when they reveal their bottom lines?

As for 1q14, face facts: $50/on gold and $1/oz on silver isn't going to save these companies.

People, so far the miner rally has seen all boats rise, but that's not going to be a theme of 2014. It's been fun so far, with arguably the most fun being had by people who were bold enough to buy the real dogs of the sector and see them run hard, but at some point we're going to see the cream rise and the crud fall back. For my money, that process starts today.

The customs official said that since December, authorities have seized about a ton of gold from 19 companies suspected of asset
laundering. Most of the gold was confiscated from four companies,
including C.G. Koening, a supplier of Canadian miner Dynacor (DNG.to),
said the customs source. Dynacor and C.G. Koening could not be reached
for comment on Tuesday. Last month Dynacor said it was holding off on
buying gold ore from its suppliers because of the crackdown and said it
complies with all regulations.

MONTREAL, QUEBEC--(Marketwired - Feb. 12, 2014) - Dynacor Gold Mines Inc. (TSX:DNG)(OTC:DNGDF) (Dynacor or the Corporation) firmly denies the information published in a Reuters press release dated Tuesday 11th February 2014 stating that "... gold confiscated from four companies, including C.G. Koening, a supplier of Canadian miner Dynacor... ". Dynacor has no contact nor any relationship with C.G. Koening and this company is not one of Dynacor's suppliers.

Furthermore, Dynacor has not had any of its gold confiscated by the authorities. Dynacor is waiting for the authorities to complete their review of the export documentation supplied to the Customs officials and will resume its exports once this review has been completed. Dynacor reiterates that all of its suppliers are registered in accordance with Peruvian laws (see Press Release dated January 29, 2014).

Dynacor has requested a formal retraction from Reuters, as such false information may have had a disruptive effect on the market.

"...the
successful resolution of the Santa Ana dispute is a critical component
to the Company's ability to raise financing for, and ultimately the
potential success of, the Corani Project."

And the question is, why?

Why should Corani depend on Santa Ana? What's stopping BCM from moving Corani forward without Santa Ana? Aren't they separate (though wholly owned) limited companies inside Peru? Y'know, if I were the Peruvian government flunkey handling the BCM arbitration case, that kind of thing would have my head scratching and thinking about a small and failing foreign company trying to strongarm its host nation. It might just rub me up the wrong way after a while and get me asking whether Corani is as world class as BCM makes out and if it is, why they can't get financing from a source other than Santa Ana cash flow.

Here's how IKN246, dated January 26th, opened its analysis of the Argentina Peso devaluation just days previously (and when the howls of doom were reaching crescendo):

"The move by Argentina’s official currency rate last week, from slightly under ArgP$7 to ArgP$8.01 at the close Friday, was the big economic news out of the region last week. Please note the word ‘official’ is underlined there, because the “street rate” (known as the “dollar blue” by those who ply the trade in Buenos Aires) is hovering around ArgP$12 to the dollar and it’s going to be very interesting to see whether that gap between official and black market rates maintains, widens or reduces. For the record, I expect the breach to reduce in the medium-term but it’s anyone’s guess what it will do in the next five days."

Here's how that breach between the Official Peso rate and the Dolar Blue rate has evolved:

please note the cut-down Y-axis, done not to trick but to help the eye see the differences

As you can see, the breach was at ArgP$4.68 to the dollar before the deval, a dangerously high level. Days after when the nerves hit their peak (driven in no small measure by the death-rattling reports from the bullshit artists in the press) it got to 5.1, but since then the breach between official and street rates has dropped quickly and today stands at 3.68. And isn't that what you'd expect from a policy decision that's working? But of course, you won't hear anything of the sort from the Engligh language coverage of the issue because it doesn't fit with the laid-down narrative of how Argentina's going straight to hell. Guess what folks, that narrative is pure bullshit.

And by the way, here's how the Dolar Blue has progressed since the deval and much to the surprise of anyone who thought the bizmedia's coverage of the subject was accurate at the time, it's now down to 11.50, which is lower than the pre-deval day.

please note the cut-down Y-axis, done not to trick but to help the eye see the differences

It's not that the mediocrity known as EngLang journos in LatAm don't have a clue, it's that they only care about promoting their own biased and ultimately false agenda. When that agenda agrees with facts and reality you can't stop them from filing and filling your bizscreen, but when facts disagree with their stance, these so-called reporters suddenly STFU.

Bought deals, private placements, non-brokered, you name it. Therefore here's a piece of advice, free gratis and for nothing: If you feel like going for a spec buy on a beaten-to-crap junior exploreco don't let dumbasses like me stop you, but do yourself a big favour and check your prospect's treasury position first. If it's a high risk/high reward set-up you wouldn't want to jump on the horse that comes to a sudden stop, you want the one that's free to keep galloping into the sunset.

Chile has just imposed its second largest ever environmental fine on a mining company (after last year's $16.5m on Pascua Lama) by imposing a U$4.5m fine on Kinross (K.to) (KGC) for making a long-term pig's ear at its Refugio project in the Maricunga and breaking a whole heap of rules. On reading the note, I particularly liked the way in which during the investigation period K admitted the shortcomings but then proposed illegal remedies to them, as they considered the problems to be purely economic and nothing to do with the environment.

Now for sure $4.5m isn't going to make a lasting dent in the balance sheet, but those in that care should compare the way in which miners insist that everything's rosy and wonderful and they use world class compliance standards all the time with everybody...and the reality when they're called to task in a public forum.

A big hoo-hah has been set off in Peru with the decision (internal, non-committee, executive order) by the Humala government to raise the monthly salaries of its ministers by 100%. Yup, overnight they decided to double their wage packet and will now receive U$10,638 for a month's work.

Not surprisingly the pushback has been strong, especially from public sector workers such as teachers, judges and police who have been refused salary increases by the government on the grounds that they can't afford them. Meanwhile, the defence of the 100% salary increase from the government has been along the lines of "they'd earn much more in the private sector and we need to attract the cream of the crop to run the governmen ministries, therefore we must compete". In other words, the usual stuff from both sides.

As you can see, Chile tops the list with ministers that earn U$14,341 per month on average, then comes Brazil on U$11,222 and now jumping up to third place is Peru, with its U$10,638/month salary. That already looks pretty heavy, as anyone with a smattering of knowledge about South America knows that Brazil and Chile are more expensive places to live in and then there's already a big gap to the 4th placed Uruguay at U$7,197/month. Meanwhile, down there at the bottom we have Bolivia, whose ministers get U$2,329/month in salaries.

But El Comercio went another step and it's this chart below that gives an idea why this doubling of salary is causing indignation in Peru this week. What the report did was to check with the World Bank database for the minimum wages in each country in dollar terms, then divide said minimum wage into the ministerial salary numbers. This gives a ratio of the multiple to minimum wage your minister earns.

And now, as you see, Peru is at the top because its ministers earn 40 times the minimum wage. Chile is still high up, but then a big drop to all others, Brazil included. Right there at the bottom, Argentine ministers earn 8X the minimum (which is partly due to Argentina's minimum being the highest of the region). On seeing this and using each country's baseline salary as a yardstick for the cost of living, we get a better idea as to why people are up in arms in Peru over this ministerial payout.

So tell me again how this Ollanta government is all left wing and Chávez-worshipping, like you were telling me in 2010?

I own this one, bought at an average of 10c and held through a very quiet period when nothing happened and the stock went as low as 4c and 5c. I've also visited the flagship Suriloma property and know the management team, which is why I held on (as both impressed).

But as that 12 month chart shows, suddenly and lately people have paid up to own it. We're also due drilling results from Suriloma any day now. Like I say, I'm long DAR.v so bear that in mind but the pop today is now +50% at 15c, worthy of sticking on your radar for the next few days until those results show up, I'd say. I'm not selling into it, that's for sure.

...when the big and important news reporter people* decide all at once and all coincidentally like to drop headline coverage of an issue. For example, let's check on Argentina's Dolar Blue informal dollar rate since the devaluation hit on the morning of January 23rd:

Well would you look at that! It's back to 12.10 vs the greenback, just 10c away from the pre-"crisis-Argentina-about-to-explode" moment. Oh, and the official rate is down two notched to 7.85 this morning too.

You honestly think newswires send their best people to work down here?

UPDATE: Just after posting a big move in the Dolar Blue, which is now down to 1.85 vs the US Dollar.

*otherwise known as biased moronic idiotic fuckwits who get hired by Bloomberg to stuff their side of the story down your throat and then ignore anything that doesn't fit the party line

I'm surprised how little HBM dropped at the open (~5%). AZC got a nice pop though and the market is obviously assuming that yesterday's bid isn't going to be the final take out price. I'm leaving this one alone for the time being, either stock, long or short. There are a lot of moving parts and several ways it can pan out.

TORONTO, ONTARIO--(Marketwired - Feb 9, 2014) - HudBay Minerals Inc. ("Hudbay" or the "company") (HBM.TO)(HBM) today announced that it intends to commence an offer to acquire all of the issued and outstanding common shares of Augusta Resource Corporation ("Augusta") not already owned by Hudbay (the "Offer").

Under the terms of the Offer, Augusta shareholders will be entitled to receive 0.315 of a Hudbay common share for each Augusta common share held, representing approximately C$2.96 per Augusta common share (based on Hudbay's closing share price on the TSX on February 7, 2014).continues here

So, that explains Friday's action. Leaky leaky.

UPDATE: So if I have my ballpark numbers right, HBM with a market cap of U$1.5Bn is committing that much again to the combo of 1) buy AZC then 2) build Rosemont. And this is on an all-share deal.

I'd hate to be the guy who bought HBM shares for a quick trade in the momentum frenzy on Thursday and Friday then held them over the w/e.

Yesterday Saturday, the mayor of Corani held a press conference at which he said he was bringing criminal charges against four people, all members of the same family (the Tacar López family, to be exact) who will be accused of falisfying documents.

At the presser, mayor Edmundo Cáceres Guerra showed those present a copy of the original document signed between Corani politicos and Bear Creek Mining (BCM.v), which made no mention of supposed persoanl payments to him and to one other person, as per last week's accusations. Accoridng to the mayor (translated), "The notary (who witnessed the signing ceremony), the mining company and we deny the accusations that have been made against us. The Tacar López family are those who are accusing us of these things, but with false documents."

Total Pageviews

The information and opinions contained within this site reflect the personal views of Inca Kola News and therefore all material within should not be construed as accurate or reliable or be utilized as advice for investment or business purposes. Independent due diligence and discussions with ones own investment and business advisors is strongly recommended. Accordingly, nothing on this site should be construed as offering a guarantee of the accuracy or completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. All opinions and estimates included on this site are subject to change without notice. All content may be reproduced under fair use doctrine providing proper credit and a return link is made to this site.